1

Challenges for the protection of the rights of communities

impacted by infrastructure projects in Brazil:

A preliminary analysis (Working Paper)

Flavia Scabin

Summary

The main purpose of this paper is to spell out the main challenges faced by three

hydroelectric power plants in the Amazon - Jirau, Santo Antônio and Belo Monte- in

preventing adverse impacts on local populations and in taking measures to remedy

possible violations. The study focuses essentially on how decisions are taken in the

planning, installation and construction phases of the large hydroelectric dams and how

they influence the capacity of businesses to protect the rights of local communities.

Based on official documents and interviews1 with relevant players and stakeholders, the

research findings will allow us to make recommendations: to reform the environmental

and social licensing process in the country, to make better use of human rights

instruments and to introduce business practices in line with the UN Guiding Principles.

Background:

Brazil has put in recent years great emphasis on environmental protection by issuing a

series of rules and guidelines. Among other mechanisms, it has created an independent

government agency, the Brazilian Institute of Environment and Renewable Natural

Resources, known under the acronym of IBAMA, which acts as the Ministry of

Environment’s administrative arm. Its institutional functions include the monitoring and

1 The information presented are the result of 30 semi-structured interviews carried out in 2014 with

different actors and stakeholders involved in environmental licensing of large-scale infrastructure projects

(companies, banks, government, civil society). These interviews are part of a research held by the

Fundação Getulio Vargas Center for Applied Legal Research on the challenges and opportunities for

environmental licensing of large-scale projects in Brazil and coordinated by Flavia Scabin and the Nelson

Novaes. I am grateful to Julia Cruz for her support in the analysis of the interviews.

2

control of the use of natural resources and of environmental licensing authorizations in

cases of large-scale projects, such as the construction of hydroelectric plants.

In the absence of a legal framework for social and human rights pre-requisites,

IBAMA’s environmental licensing has been responsible to cover many of the socio-

economic and juridical aspects related to the protection of local populations.

IBAMA’s socio-economic activities are complemented by those carried out by FUNAI,

the Brazilian National Indian Foundation, known as FUNAI (Fundação Nacional do

Índio) in charge of the protection of indigenous rights. FUNAI has the duty to intervene

in any licensing process that affects indigenous communities and lands, to assess and

mitigate external impacts on indigenous cultural and natural environment.

Despite these provisions, evidences show that in many cases of large infrastructure

projects have had adverse impacts on local communities. In a study carried out by the

Special Committee of the Council for the Defence of the Human Person in 2007 on

“Those Affected by Dams” in seven hydroelectric plants, serious right abuses were

pointed out. These include the lack of participation of those affected by the project;

disrespect of the cultural rights of indigenous people, quilombolas and traditional

communities; omission on the particular needs of vulnerable social groups such as

elderly people and children; and inadequate working conditions.

International human rights law imposes obligations on states to respect, protect and

fulfil the rights of people exposed to the impacts of major infrastructure projects,

whether these impacts stem from the acts and omissions of state agents or those of third

parties (private investors, contractors etc.). These obligations comprise state duties to

put into place an effective domestic legal framework to prevent human rights violations,

and to provide effective redress to those harmed by the project. They have been

specified in the case law of international human rights courts as well the UN Guiding

Principles on Business and Human Rights (UNGPs), endorsed by 193 countries at the

Human Rights Council in June 2011.

The first pillar of the UNGPs is dedicated to the “state duty to respect human rights”,

which comprises the whole spectrum of human rights obligations under international

law (respect, protect and fulfil). A number of requirements stipulated by the UN

3

Guiding Principles derivative of international human rights law are of direct relevance

to Brazil’s conduct in relation to the dam construction projects. The Commentary to

Foundational Principle 1 provides that states “have a duty to protect and promote the

rule of law, including by taking measures to ensure equality before the law, fairness in

its application, and by providing for adequate accountability, legal certainty and

procedural and legal transparency”.

We have chosen to look into the situation of three hydroelectric power plant under

construction to have better understanding of the persistence of abuses in the new

international legal framework.

Some information about the hydroelectric power plants

The Santo Antônio Hydroelectric Plant 2 located on the Madeira River, 7 kilometres

from the city of Porto Velho, in the Brazilian state of Rondônia, started operating on

March 30, 2012 with 26 turbines that generates 1853,74 MW. It will be completed in

November 2016, operating with 50 turbines that will generate 3568 MW, enough

energy to supply power consumption for more than 45 million people. Santo Antônio

Energia, a consortium of state-controlled firms and big Brazilian construction

companies, runs the Santo Antônio Hydroelectric Plant and is the second largest private

company of the electric sector of Brazil.

The Jirau Hydropower Plant 3 , also located on the Madeira River in Rondônia state,

consists of 2 hydroelectric powerhouses built on each margin of the river. Each one is

equipped with 2 assembly areas of 50 generating units. When completed, it will

generate 2184,6 MW on average, enough to supply electricity to more than 10 million

homes. .Energia Sustentável do Brasil, a consortium of state-controlled firms and

multinational companies, runs the Jirau Hydropower Plant.

2 Generation. Available at http://www.santoantonioenergia.com.br/en/energia/energia1/ Accessed in

06.02.2014. Usina inicia geração de energia. Available at http://www.santoantonioenergia.com.br/usina-

inicia-geracao-de-energia/ Accessed in 06.02.2014. 3 Enhanced engineering ensures greater energy efficiency for Brazil. Available at

http://www.energiasustentaveldobrasil.com.br/caracteristicas.asp?lg=2 Accessed in 06.02.2014.

4

The Belo Monte Dam Complex 4. is located 3000 kilometres deep in the Amazon

basin, on the Xingu River, in the city of Altamira, in the Brazilian state of Pará. When

completed, it will be the world’s third largest hydroelectric dam, behind China’s Three

Gorges and Itaipu, on the border between Brazil and Paraguay. Norte Energia, a

consortium of state-controlled firms and pension funds, runs the enterprise. It is

collaborating with a second consortium that comprises Brazil’s big construction

companies, such as Camargo Corrêa and Odebrecht.

Planning, Installation and Construction of Power Plants: Main

Challenges

Stage 1. Planning and bid requirements

The environmental licensing (licenciamento ambiental) in Brazil has an elaborate code

of pre-requisites that need to be fulfilled by any project or activity causing impact on the

environment or using natural resources. It has two main goals: the first is to guarantee

that the implementation of a chosen project is carried out with minimum adverse impact

on the environment and on local populations, and the other is to put in place mitigation

and compensation plans that correspond to the interventions (CONAMA nº 237/1997).

The licensing procedure consists of three successive phases where the condition for the

access to the new phase is the fulfilment of requirements foreseen in the previous phase.

The first one, the Preliminary License (licença prévia) attests the project environmental

viability and establishes the social and environmental conditions that must be fulfilled

for its installations. Second, the Installation License authorizes the construction works

to begin and establishes conditions for the management and transparency of the impacts

caused by each intervention. Third, the Operational License authorizes the project to

begin functioning after verifying the compliance with the two previous licenses.

4 The Belo Monte Dam Complex. Available at http://norteenergiasa.com.br/site/ingles/belo-monte/

Accessed in 06.02.2014. Dams in the Amazon: The rights and wrongs of Belo Monte. Available at

http://www.economist.com/news/americas/21577073-having-spent-heavily-make-worlds-third-biggest-

hydroelectric-project-greener-brazil Accessed in 06.02.2014.

5

In the case of hydroelectric power plants, decisions taken at an early stage of planning

determine some of the potential human rights impacts of future actions. These include

land acquisition, forced eviction and/or displacement of local communities, resettlement

policies and compensations.

As the three power plants located in the Amazon are part of a Federal Government

program known as PAC (Program of Acceleration of Growth), it was to be expected

that special measures would be taken to commit public and private businesses to prevent

adverse effects on local communities and to devise special measures to remedy rights

violations.

The UN Guiding Principle 4 spells out clearly the State responsibility in such cases:

“States should take additional steps to protect against human rights abuses by business

enterprises that are owned or controlled by the State, or that receive substantial support

and services from State agencies …. including, where appropriate, by requiring human

rights due diligence”

However, no effective preventive measures were taken by the government to meet their

obligations as neither the auction notice nor the concession contract included provisions

for human rights protection and for the remedy of potential abuses. Several factors

contributed to this situation:

- The public procurement process focuses on economic efficiency of the project,

without taking into consideration the necessary investments for the control and

mitigation of impacts. Where the minimum price is stipulated as the only criterion

for selection in the auction notice, companies are driven to underestimate operation

costs related to the compensation of social and environmental impacts, according to

many of the interviewees. Others feel that the analysis of large projects, especially

those that are part of the PAC, are political. Some even claim that many steps of the

licensing procedure are "skipped" in order to fulfil the agenda of the government

and businesses involved, because of the need to complete their projects in the

shortest possible time.

6

- Absence of an overall strategic development plan. Project-based environmental

licensing that considers each case in isolation tends to be limited in scope, as it does

not take into consideration wider issues linked to regional or national development,

such as the country's energy matrix, regional transport investment or local

development. This argument is recurrent in most interviews made with businesses

and civil society organizations, and is shared by the Secretary of Strategic Matters

of the President’s Office in a document published in 20095.

- Lack of coordination among institutions. The dialogue between IBAMA and

FUNAI, as well as between them and other institutions is often flawed, because of

the lack of an overall picture on environmental and social impacts caused by the

construction of large infrastructure projects. Consequently, there is no full analysis

of the effectiveness of measures undertaken to prevent, mitigate and remedy the

negative impacts of these projects. This lack of coordination is observable also

between the federal government and state or local government. Often, the federal

environmental agency determines the fulfilment of infrastructure and sanitation

requirements, for example, without consultation with local authorities on health,

education and labour.

- Poor quality of environmental impact studies. Brazil has a wide variety of biomes

and cultures in its territory, which entails complex analyses, especially in isolated

regions such as the Amazon. The impact studies, which serve as parameters for

compensation and mitigation measures, are done by the entrepreneurs who are

themselves responsible for taking these measures. For this reason, most interviews

questioned the trustworthiness of these studies.

- Prevalence of political arguments in detriment to technical opinions. In many

cases political consideration prevail over technical opinions. As provided by law,

technicians from the environmental licensing agency, IBAMA, are required to

examine and approve the environmental studies provided by the entrepreneur.

5 According to the Secretary of Strategic Matters of the President’s Office: “the absence of founding

principles which make a balance between the ideal implementation for the environmental preservation

and the necessity of economic development given the lack of application of an environmental strategy,

results in in a distortion of the discussion, definition and decision on overall questions of environmental

licensing”. SEAE, “Licenciamento Ambiental: Documento para discussão: Diagnóstico”, 2009

7

However, in many instances, the Board (Conselho Superior) of IBAMA gives the

final approval without taking into consideration the technical decisions. In the case

of Belo Monte, for example, the Board gave its approval to the impact study despite

the fact that technicians pointed out that the studies presented were incomplete, as

they left out the analysis of impacts on various local groups. Consequently, a civil

public action was filed by the Ministério Público Federal against the person in

charge at IBAMA at the time, who approved the studies presented by the

entrepreneur in disagreement with the recommendations of the technicians of the

Agency and without providing legal grounds to do it.

- Lack of independence of the environmental control agencies. IBAMA is under a

severe political pressure; especially in infrastructure projects that are part the

Brazil's Growth Acceleration Program (PAC). Therefore, their independence in

giving technical advice and in monitoring compliance measures is being seriously

questioned, especially by civil society organizations.

- ‘Underestimation’ of social aspects of environmental impacts. IBAMA, the

federal agency responsible for the licensing authorizations for most large-scale

projects, does not have sufficient technical capacity and human resources to monitor

impacts or the fulfilment of conditions imposed in the compensation plan. This

shortcoming leads to the ‘underestimation’ of environmental impacts in general and

in particular of social consequences linked to the construction of the plant. In this

regard, a research conducted by the World Bank between 2006 and 2008 showed

that only 20% of IBAMA’s technicians in charge for impact studies are graduated in

social studies, showing the lack of preparation of the agency to deal with social

issues. This affects especially issues related to indigenous and traditional

communities living in the areas where the hydroelectric plants are located in the

Brazilian Amazon.

- Lack of effective dialogue with local population. Public hearings with affected

communities, which should be part of the licensing process, are held only after

decisions regarding social development issues have already been taken. A study of

the electrical sector carried out by the World Bank between 2006 and 2008 shows

8

that on average the first public hearing held with the local population takes place

some 852 days after the environment organ issues the Term of References to the

contractor for his study of environmental impacts. About 100 days later, the

preliminary licensing authorization (licença previa) is issued without analyzing or

responding to the demands made by the community during the public hearings6.

All these elements show the failure of the Brazilian State in performing its ‘Regulatory

and Policy Functions’ as provided by Principle 3 of UNGPs. There is a great need for

Brazil to establish a more coherent policy “to ensure that governmental departments,

agencies and other state-based institutions are aware of and observe the Sate’s human

rights obligations when fulfilling their respective mandates”, as per principle 8. This

principle calls on states to ensure policy coherence, both vertically (states having “the

necessary policies, laws and processes to implement their international human rights

law obligations”) and horizontally (states “supporting and equipping departments and

agencies ... to be informed of and act in a manner compatible with the governments’

human rights obligations”).

Stage 2. Construction venue, infrastructure development,

procurement and outsourcing activities

This is the stage where potential human rights impacts are more likely to occur and

affect vulnerable groups. These include labor rights violations (such as poor working

conditions, union intimidation); adverse effects on local services in neighboring

communities; failure to provide adequate housing and living conditions for resettled

populations. There is also the danger of grave violations by business partners operating

within their sphere of influence, such as child labor and sexual exploitation.

In the most complex stage, corporations face the dual task of keeping to their schedule

of activities and financial commitments, while at the same time, responding to legal and

social obligations that are not always clearly spelled out in the planning prerequisites.

6World Bank, “Licenciamento Ambiental de Empreendimentos Hidrelétricos no Brasil”, 2008.

9

Most of the challenges faced during the second stage of large dam projects derive from

the shortcomings of the first one:

- Lack of monitoring and enforcement. As shown above, the environmental

licensing procedures composed of three successive phases where the condition for

the access to the new phase is the fulfilment of requirements foreseen in the

previous phase, are often overlooked. The fact that licenses are awarded without

proof of compliance with conditions laid down in the previous licensing

authorization, make entrepreneurs aware that the capacity of the Agency to enforce

the obligations imposed is low or lenient with the non-compliance. Moreover,

another topic of concern in relation to compliance with conditions of environmental

licensing is expressed by a civil society organization, Instituto Socio Ambiental

(Socio-Environmental Institute), in a technical note on assessments made by

IBAMA Technical Reports. According to their survey, Technical Reports do not

take into account the quality of compensation measures or services provided by the

company before authorizing for the renewal or issuance of a new license for the next

phase. For example, if the company is asked to reallocate people displaced by the

project, the agency only certifies that the amount of homes built is correct, but does

not consider whether these homes are suitable for local cultural conditions of life. In

the case of Belo Monte, many of the houses designed by companies in the

reallocation plan of displaced communities were not suitable to accommodate the

size of beds built with local materials nor for the typical way of life of families in

this area.7

- Overburden of local infrastructure and services. Local governments in small

towns are not equipped to deal with the impacts of large projects. For instance, in

Jirau, Santo Antônio and Belo Monte, there was no prior investment in local

communities capable of ensuring basic public policy in health, sanitation, housing

7 In accordance with ISA, NOTA TECNICA: estado de cumprimento das condicionantes socioambientais

da UHE Belo Monte, 2013, Available at:

http://www.socioambiental.org/sites/blog.socioambiental.org/files/nsa/arquivos/nota_tecnica_final.pdf

10

and education to respond to the demand created by the influx of migrant workers. In

the case of Belo Monte, for example, the peak of the project meant the influx of

20,000 male workers for a city of about 70,000 inhabitants. Measures to decrease

the impact of the overcrowding are obviously necessary, particularly in the spheres

of public health and sanitation. However, a report done by the Socio-environmental

Institute (ISA) shows that the health infrastructure of the region of the Belo Monte

dam remains unaltered and that all the sanitation provisions were delayed.

- Lack of adequate working conditions and absence of leisure and cultural

activities. Many of the workers of large infrastructure projects in the Amazon are

migrants from other regions and from former infrastructure projects. They are away

from their families and are housed in isolated area in the middle of the forest, in

dormitories with other 3 or 5 workers and have limited access to culture and leisure.

This situation has been associated with the increasing number of cases of sexual

exploitation, including sexual exploitation of children and adolescents, in the

neighbouring cities.

- Lack of clarity about the responsibilities of public and private stakeholders.

There is no clear policy definition on the responsibilities of business and

government in relation to prevention and mitigation of impacts of infrastructure

projects, on local communities or on ways to address the problems. The lack of

clarity is increased by the fact that in all the three dams the State is at the same time

the funder, the supervisor, and the controller of the consortium in charge of the

construction.

- Lack of mechanisms for dispute resolution within the licensing process. There is

no mechanism under Brazilian law for the settlement of disputes within the

licensing process. This contributes to a high degree of judicialization of cases

related to the quality and effectiveness of the remedy measures required from the

company in relation to environmental and social impacts.

- Lack of access to justice in cases of human rights violations. In many of these

cases, Courts has refrained from taking decisions regarding business responsibilities,

based on the argument that all matters related to the federal government's Growth

11

Acceleration Program, known as “PAC” (the construction of the Dams of Belo

Monte, Jirau and Santo Antonio are part of the mega-projects of this Program)

should be of the concern of the Executive.

- Assessment of Brazil’s failure to prevent and redress human rights violations

committed in the course of the planning, installation and construction of the

Belo Monte dam. Having found Brazil’s domestic legal system insufficient to

effectively protect their human rights during the construction of the Belo Monte

Dam, various indigenous communities in the Xingu River Basin appealed to the

Inter-American Commission on Human Rights (IACHR). On 1 April 2011, the

IACHR granted precautionary measures8, requesting the State of Brazil to suspend

the licensing process and stop any construction work pending the fulfilment of

certain minimum conditions aimed at protecting the human rights of the indigenous

communities against the impacts of the Belo Monte dam project. Many of the

conditions imposed by the IACHR relate to concerns also identified in this report.

According to the IACHR, Brazil was under an obligation to conduct consultations

that are free, informed, of good faith, and culturally appropriate, with a view to

reaching an agreement with the affected indigenous communities. This, in turn,

presupposed that the communities were given advance access to the project’s Social

and Environmental Impact Study. Brazil was further under an obligation to protect

the life and physical integrity of the members of the indigenous people, including

against the spread of diseases and epidemics derived from the massive influx of

people as a consequence of the construction works. The Brazilian government

disagreed with the measures recommended, choosing to withhold its dues to the

Organization of American States (OAS) and to withdraw the candidacy of the former

Human Rights Minister Paulo Vanucchi for a seat on the IACHR9. As a result of this political

pressure, the IACHR modified the aim of the precautionary measures. In July 2011, the

IACHR, dropping its request to suspend the licensing process, requested the State of

8 PM 382/10 - Indigenous Communities of the Xingu River Basin, Pará, Brazil. Available in:

http://www.oas.org/en/iachr/indigenous/protection/precautionary.asp Accessed in 13.06.2014. 9 Brazil's Belo Monte DamSacrificing the Amazon and its Peoples for Dirty Energy. Available at

http://amazonwatch.org/work/belo-monte-dam Accessed in 13.06.2014.

12

Brazil to take effective action to implement and execute the legal measures already

in place, and to design and implement specific measures to mitigate the effects of

the construction of Belo Monte on the territory and life of the indigenous

communities. As concerns the protection of the right to health of the affected

communities, the Commission called on Brazil to accelerate the finalisation and

implementation of existing plans and programs to this regard. Finally, the IACHR

requested Brazil to adopt effective measures to protect the communities’ ancestral

lands against intrusion and occupation by non-indigenous people and against the

exploitation or deterioration of their natural resources.

- Lack of liability of companies involved in violations of rights. Much of the

infrastructure projects are carried out in Brazil by a consortium of companies, which

reinforces the effects of the ‘corporate veil’ as an obstacle to accountability of

companies for human rights abuses. For example, in the case of Belo Monte, out of

the 19 public civil actions filed by the Ministério Público Federal only 2 were filed

against the constructions companies and 3 against the consortium that won the grant.

The major part these public civil actions were filed against IBAMA. Besides, the

legal liability regime applied by the courts depends on the identification of a causal

link between the actions taken and the damage caused. Thus, many of the impacts

resulting indirectly from company activities or from within its chain of production

are not made accountable. In the Belo Monte case, for example, the court failed to

hold companies accountable for cases of child prostitution because the brothel

where the girls were found was a few meters away from the construction site. Yet it

is well known that 43 brothels were established in the region since the beginning of

the construction of the hydroelectric plant, because of the arrival of 20,000 workers

without their families to the region.

Pillar three of the UNGPs deals with “Access to Remedy” and requires states to “take

appropriate steps to ensure, through judicial, administrative, legislative or other

appropriate means, that when such [human rights] abuses occur within their territory

13

and/or jurisdiction those affected have access to effective remedy” (Principle 25).

Pursuant to the commentary to this principle,

[a]ccess to effective remedy has both procedural and substantive aspects.

The remedies provided by the grievance mechanisms ... may take a range of

substantive forms the aim of which, generally speaking, will be to

counteract or make good any human rights harms that have occurred.

Remedy may include apologies, restitution, rehabilitation, financial or non-

financial compensation and punitive sanctions (whether criminal or

administrative, such as fines), as well as the prevention of harm through, for

example, injunctions or guarantees of non-repetition. Procedures for the

provision of remedy should be impartial, protected from corruption and free

from political or other attempts to influence the outcome”.

The operational principles relating to state-based judicial remedies elaborate on these

requirements. At a more general level, the duty to provide for effective judicial

remedies requires States to ensure that they do not erect barriers to prevent legitimate

cases from being brought before the courts; and that the provision of justice is not

prevented by corruption of the judicial process, including the assertion of political and

economic pressure that undermines the independence of the judiciary. At a more

specific level, the commentary highlights the danger that certain groups including

indigenous people “are excluded from the same level of legal protection of their human

rights that applies to the wider population”. The UNGPs call upon states to pay

particular attention to the rights and specific needs of such groups as concerns access to

remedies, procedures, and outcomes.